AMD buying server maker ZT Systems for $4.9 billion as chipmakers strengthen AI capabilities

AMD is buying server maker ZT Systems in a cash-and-stock deal worth $4.9 billion as the chipmaker strengthens its artificial intelligence capacity in its efforts to compete with Nvidia.

AMD plans to sell its server manufacturing business after the deal closes, with mergers and acquisitions in tech and elsewhere getting a closer look by the Biden Administration.

ZT Systems, based in Secaucus, New Jersey, has designed and rolled out data center and storage infrastructure systems to cloud companies for more than a decade.

The transaction includes a contingent payment of up to $400 million based on certain post-closing milestones.

Once the deal closes, ZT Systems will join the AMD Data Center Solutions Business Group. AMD said Monday that it will look for a buyer for its U.S.-based data center infrastructure manufacturing business.

The transaction, which was approved by AMD’s board, is expected to close in the first half of next year.